It is quite extraordinary how much taxpayer money can be spent through expenditures that face no systemic evaluation on the merits. The GAO released a report dated September entitled Corporate Tax Expenditures: Evaluations of Tax Deferrals and Graduated Tax Rates. The main findings are not exactly news: deferral reduces tax on U.S. multinationals by delaying tax until repatriation, and we don't really know whether graduated corporate tax rates are accomplishing whatever purpose we think they serve. For both cases, maybe the most alarming point is the last one on each topic: no agency has evaluating these expenditures as a mandate. Here are the summarized findings:
1. some experts say deferral promotes competitiveness of U.S. multinationals, but others say this ignores the effect on other corporations that can't use deferral, as well as broader economic impact.
2. deferral could distort corporate investment and location decisions and we don't necessarily know who benefits; meanwhile, deferral adds complexity to the tax code.
3. no other federal spending programs appear to subsidize U.S. MNCs in the same way
4. estimates suggest deferral doesn't cost much budget-wise
5. no federal agency has been tasked with evaluating deferral.
On graduated corporate rates:
1. graduated rates are supposed to support small business, but we don't know if they do.
2. graduated rates present little complexity, but they probably induce planning and their impacts on decision-making aren't well understood.
3. graduated rates may be related to (a.k.a. duplicative of) other federal spending programs targeted to small businesses.
4. estimates suggest graduated rates don't cost much budget-wise
5. no federal agency has been tasked with evaluating the graduated rates.
More at the link, but not dramatically so.